Showing 1 - 10 of 694
money and inflation. When analysing the full sample of countries we find a strong positive relation between the long …-run inflation and money growth rate. The relation is not, however, proportional. The strong link between inflation and money growth … inflation and money growth for low inflation countries (on average less than 10% per annum over the last 30 years) is weak. We …
Persistent link: https://www.econbiz.de/10005656210
Fundamental models of money always exhibit autarkic equilibria where money has no value. In this paper we propose a … behavior and the primitives of the economy, thus offering insights on the conditions under which money emerges as a medium of … exchange. Overall, our results favour money over autarky, especially if agents are patient. …
Persistent link: https://www.econbiz.de/10008854470
We compare monetary union to flexible exchange rates in an asymmetric, three-country model with active monetary policy. Unlike Friedman's (1953) case for flexible rates, we find that countries with high degree of nominal wage rigidity are better off in a monetary union. Their benefits increase...
Persistent link: https://www.econbiz.de/10005504261
This paper documents the evolution of the legal independence of the Bank of Israel since its creation in 1954 to present times, provides an international comparison, and assesses the changes in the actual independence of the Bank on a yearly basis following the 1985 stabilization of inflation....
Persistent link: https://www.econbiz.de/10005497895
money. With commitment, trust is automatically achieved and competition ensures efficiency. Without commitment, competition …, therefore, the Friedman rule cannot be achieved. The quality of money can only be observed after its purchasing capacity is … realized. In that sense money is an experience good. We show that the two problems, the time-inconsistency in the private …
Persistent link: https://www.econbiz.de/10004976784
We develop a theory that rationalizes the use of a dominant unit of account in an economy. Agents enter into non-contingent contracts with a variety of business partners. Trade unfolds sequentially in credit chains and is subject to random matching. By using a dominant unit of account, agents...
Persistent link: https://www.econbiz.de/10011084311
This paper studies monetary policy in models where multiple assets have different liquidity properties: safe and "pseudo-safe" assets coexist. A shock worsening the liquidity properties of the pseudo-safe assets raises interest-rate spreads and can cause a deep recession cum deflation. Expanding...
Persistent link: https://www.econbiz.de/10011084662
We study empirically daily French and German interest rate changes since the Basel-Nyborg agreement of September 1987. In particular, we ask whether the shock associated with German unification altered the degree of leadership of German monetary policy in the ERM. We conclude that Germany's...
Persistent link: https://www.econbiz.de/10005067378
We characterize the optimal sequential choice of monetary policy in economies with either nominal or indexed debt. In a model where nominal debt is the only source of time inconsistency, the Markov-perfect equilibrium policy implies the progressive depletion of the outstanding stock of debt,...
Persistent link: https://www.econbiz.de/10005067518
Bailey-Friedman Optimal Quantity of Money (OQM) rule: the pecuniary opportunity cost of holding money is equal to zero. There …) There is no money or the nominal interest rate on money can be set freely. (2) The constrained price setters of the Calvo …
Persistent link: https://www.econbiz.de/10005067586